Store brand vs. national brand prices: Willingness to pay ≠ willingness to accept

Determining the appropriate price for store brands relative to national brands is important. When setting the price, consumers’ perceptions of price and quality need to be considered. Two past approaches employed by store brand researchers to reveal consumers’ value of store brands include asking either: (1) the price discount they would need to be offered to switch from a national brand to a store brand (a measure of “willingness-to-accept”); or (2) the price premium they would be willing to pay to switch from a store brand to a national brand (a measure of “willingness-to-pay”). Research in other domains reveals that willingness-to-accept (WTA) and willingness-to-pay (WTP) estimates can diverge. We formally tested whether WTA estimates differ from WTP estimates elicited from consumers with respect to store and national brand prices. As predicted, WTA price estimates exceeded those of WTP. This pattern held regardless of whether product-quality equivalence of store and national brands was explicitly provided to respondents or whether respondents were free to make their own assumptions of product quality. Implications for private label researchers and product brand managers are discussed.